European businesses and consumers alike have the lowest confidence in the economy since tracking began a quarter century ago, the European Commission said earlier today.

The survey’s indicator charting how industry and households see the economy is now at its lowest point since it started in January 1985, adding pressure on the European Central Bank to stoke growth by slashing interest rates when it meets next week. The survey’s indicator tumbled from 67.2 in January to 65.4 in February. In the 27-nation EU, it fell from 63.2 to 61.

A separate survey of industry managers also hit a record low, of minus 3.51 points. The EU said this confirmed its expectation that year-on-year industrial output will be “markedly negative” in January and “clearly negative” in February.   Managers were most worried about order books and export orders and reported a sharp fall in output in recent months as well as high stocks of finished goods. They expected no major change to production soon, the EU said.

The Europeans aren’t alone:  consumer confidence is at record lows in the United States, too.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: “The Consumer Confidence Index™, which was relatively flat in January, reached yet another all-time low in February (Index began in 1967). The decline in the Present Situation Index, driven by worsening business conditions and a rapidly deteriorating job market, suggests that overall economic conditions have weakened even further this quarter. Looking ahead, increasing concerns about business conditions, employment and earnings have further sapped confidence and driven expectations to their lowest level ever. In addition, inflation expectations, which had been easing over the past several months, have moderately picked up. All in all, not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months.”

The results aren’t really surprising.  In the European case, this is easily the biggest downturn since 1985.  In the American case, it’s debatable at this point whether the stagflation of the 1970s or the recession of 1982 were worse but after months of hearing about “the greatest economic calmity since the Great Depression” and hearing dire warnings in support of  trillion dollar government stimulus packages, even consumers who might otherwise be optimistic have to be worried.

James Joyner is managing editor of the Atlantic Council. 

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